Tips for navigating the closing process when buying a new home
Watch part 4 of the ‘Money: It’s Personal’ home buying series
SAN ANTONIO – Once you have shopped for your dream house, explored your mortgage loan choices and compared your offers, it’s time to close on your new home.
But what exactly does it mean to close on a home? The Consumer Financial Protection Bureau has some tips on how to navigate the closing process smoothly and efficiently.
After a seller has accepted your purchase offer and you’ve chosen a lender you are happy with, it’s time to submit your financial documents to the lender so that they can review your information carefully.
Make sure your loan officer has all the documents they need and your updated contact information, just in case they need to get in touch with you for any additional requests for information.
The next step is to schedule a home inspection. The CFPB says buyers should set up the inspection as soon as possible so that they have plenty of time to resolve any problems. Buyers should not choose a home inspector without checking their history.
After that, it’s time to start shopping for homeowner’s insurance to protect your new home in case of accidental damage. The CFPB says lenders typically require home buyers to have insurance as a condition of a mortgage loan. You should get several quotes and make sure they meet your lender’s requirements for coverage.
Next, it’s time for you to look out for revised loan estimates. These new estimates mean that something important has changed with your mortgage loan and its costs.
The CFPB says common reasons for revised loan estimates could include the following:
- The home was appraised at less than the sales price.
- Your lender could not document your overtime, bonus or other irregular income.
- You decided to get a different kind of loan or changed your down payment amount.
- You requested a rate-lock after the lender issued the original loan estimate.
Your following step is to shop for title insurance and other closing services you may need. The CFPB says closing costs could add up to thousands of dollars, and some expenses are paid to third-party vendors, which you can shop for separately.
You must also review all your documents before closing. You will need to find out how you’ll receive your closing disclosure and other records you will need from your lender or closing agent.
Your last step is to close the deal! You should now be ready to sign the paperwork for your new home and use your loan to pay for it once it’s approved.
The CFPB reminds home buyers to save and file their documents so that they can refer to them as needed.
Make sure to keep the following four documents in a safe place:
- Closing disclosure
- Promissory note
- Mortgage, which is also known as the security instrument or deed of trust
For more information from the Consumer Financial Protection Bureau on the closing process, click here.
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